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A guest article from Jeff Fouts of taxhelpattorney.com
Did you fail your taxes last year? Are you avoiding filing them again this year? Maybe, have you not filed your taxes for several years?
Perhaps you haven’t filed because of devastating changes in your life such as a job loss, death in the family, a business that went under, or failed personal relationships with others. And now, the worst part is you are stuck in a situation where you don’t know what to do. If you come clean with your actions, the IRS might send you to prison. If you don’t come clean, maybe the IRS will hunt you down and prosecute you. The IRS calls people who don’t file their taxes “non-filers.” Fortunately, the IRS rarely prosecutes non-filers, and those it does prosecute are typically represent the most extreme cases. If you approach the IRS first about your situation, you give yourself the best chance for a successful resolution. In fact, the IRS will attempt to work out a fair deal with you in most cases. “Voluntary compliance” is the term the IRS uses to describe people who come forward on their own. If you are truthful during the process that follows, the IRS works with you and the process is fairly easy. However, if you show any signs of dishonesty, the chances the IRS will prosecute you skyrocket. The Internal Revenue Service Code says that in order to be identified as “voluntarily compliant,” you must:
– Voluntarily inform the IRS of all years you failed to file
– Acquire income from legal sources only
– Initiate contact with the IRS before you undergo a criminal investigation
– Be cooperative when the IRS helps you determine your tax liability
– Be willing to pay the full amount you owe or negotiate affordable payments Filing your taxes late is better than never filing at all. If you can’t afford the full tax liability you owe at this point, the IRS is pretty accommodating in helping you create an affordable repayment schedule. If you’re lucky, you may end up learning you qualify for an offer in compromise, which forgives all or a part of your tax liability.
What Happens If You Never File?
If you choose to avoid filing altogether, you may end facing criminal prosecution from the IRS. If you were owed a refund in the three most recent tax years, you may forfeit it. If you happened to owe the IRS money, interest and penalties will continue to be assessed against you. If you choose to instead approach the IRS, they may actually end up forgiving part of the interest and penalties you owe. The IRS may also prepare a tax return on your behalf, which represents the best interests of the IRS. You may not receive credit for exemptions and deductions that you might normally receive.
Approach the IRS First, But Not on Your Own
You will always receive a better outcome if you approach the IRS first, rather than letting it approach you. If you do approach the IRS, keep in mind the assistance of a tax attorney will improve your chances of receiving a favorable outcome.
About the Author: Jeff Fouts is a tax-efficiency enthusiast. If you are a “non-filer”, use the help of an experienced tax attorney to deal effectively with the IRS.